Chapter 7- The Business Plan: Creating and Starting the Venture – Flashcards
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Business Plan
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Written document describing all relevant internal and external elements and strategies for starting a new venture
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The Business Plan is important to those people because
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It helps determine the viability of the venture in a designated market; It provides guidance to the entrepreneur in organizing his or her planning activities; It serves as an important tool in helping to obtain financing
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Entrepreneur may need information of the following
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Location, Manufacturing operations, Raw Materials, Equipment
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Environmental Analysis
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Assessment of external uncontrollable variables that may impact the business plan
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Industry Analysis
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Reviews industry trends and competitive strategies
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Description of the venture
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Provides complete overview of the products, services, and operations of a new venture
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Production Plan
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Details how the products will be manufactured
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Organizational Plan
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Describes form of ownership and lines of authority and responsibility of members of new venture
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Assessment of risk
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Identifies potential hazards and alternative strategies to meet business plan goals and objectives
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Financial Plan
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Projections of key financial data that determine economic feasibility and necessary financial investment commitment
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If a new venture does not have a strong growth plan and does not expect to be positioned for an initial public offering in five years, the executive summary of its business plan should
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Not include any discussion of an exit strategy
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Johnson plans to start a textile business. Arrange the areas he needs to study to gather information in the correct order of occurrence
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General environmental and demographic trends, National textile industry trends, Local environmental and demographic trends, Local textile industry trends, Local competition strengths and weaknesses
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A guideline to be followed when preparing the executive summary of a business plan for a new venture
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It should emphasize in a concise and convincing manner the key points in the business plan
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How should an entrepreneur decide whether to hire a consultant or to make use of other resources when preparing a business plan for a new venture?
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By assessing his or her own skills objectively
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What are the needs of investors, particularly venture capitalists, from a new business venture?
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They want an entrepreneur to be compliant and willing to accept their involvement in the actual management of the business; They demand high rates of return from the business
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Before preparing the financial section of a business plan for a new venture, an entrepreneur should
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Create a budget including lists of possible expenditures in the first year and revenue sources
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Contents that should be included in the introductory page of a business plan for a new venture
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Company's name and address, Name of the entrepreneurs, telephone number, tax number, e-mail address, and Website address if available; A paragraph explaining the company and the nature of the business, The amount of financing needed, A statement of the confidentiality of the report
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Before conducting a quick feasibility study of the business concept of a new venture, an entrepreneur should
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Precisely state the goals and objectives of the business
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Steps taken in creating the assessment of risk in a business plan for a new venture
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Mention the potential risks to the new venture, Discuss what might happen if the identified risks become reality, Discuss the plan that will be executed to prevent, minimize, or respond to the identified risks
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Potential investors regard marketing plan described in a business plan as critical to the success of a new venture
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True
